M1 Countertrend Scalping Strategy

I love it Abade. Todays pivot points was wide. So I did a fib retracement of the previous day and put hard lines at each level. and it works a treat. I take my profits too early i need to learn to hold for a little bit longer. when 21 ema moves closer i change my take profit. but this will come with time

Nice work @RieseP Curious to know what's your balance like (if you don't mind sharing) since you're trading 5 mini lots on the DE40. I am currently testing drawdowns to see how much risk i can tolerate before I increase the initial lot size.

0.5 a lot my friend. Far from 5 lot size. My Basket of trades rarely goes over 3% DD, i take my profits early. And I’m clinical with my entires my max DD will be around 10%. You want longevity. We don’t use stoplosses so money management is paramount

I said 5 mini lots which is 0.5 lots

Right now, a safe size would be 0.01 (1 micro lot) per $1000 balance. You can stack orders comfortably. But the returns, while consistent, aren't exciting. I realise that's the nature of the of the averaging game. I did up to 0.02 lots recently and it's still fairly comfortable. My max drawdown so far only hit 1.1%. I can stomach a lot of risk, so I'm thinking to up the risk to 0.03-0.05 lots per $1000 balance.

Your 0.5 lots is already netting $100+ per day which is really cool

Guys @RieseP @cliffjaded How would you manage this one in case you are trapped:


On the M1:


These tough nuts would show up eventually.

Abade,
add my supdem Indicator and this will help you find the reversal points to enable you to reduce the risk.
cpfleger

Average to infinity and smoke a strong cigarette to curb my anxiety.

What I would do is hedge either by going pro-trend or by putting one giant opposite order equal to the size of all the average orders. This locks the loss temporarily until you unwind the hedge which logically should be when the trend reverses (as dictated by the MA crossovers). Since the loss is locked and the margin is back to zero, you can continue stacking averaging orders for the losing side.

This works out great if price moves in the direction of the big hedge you placed, then you can unwind and nurse your losing side. I have a lot of experience in hedging and usually the worst will happen - your hedge order gets triggered then it reverses back in the direction of your averaging orders and then you're stuck in no-man land trying to perpetually hedge and average your way out of a perpetual drawdown.

I'd probably just eat a hard loss at that point. Something manageable between 10-30%.

What I'm doing now, however, is trading both counter and pro-trend and averaging in both directions. I also do mean-reversion both ways.
E.g. Your basket of sell orders are reverting back to the 200ma. 20 & 50ma are already pointing down. While waiting for the sell orders to hit the 200ma, you take buy mean reversion orders back to now down-sloping 20 and 50ma. These additional profits will help to buoy the drawdown of the losing sell basket, making it easier to break even.

Another situation is this. You place the first sell mean reversion trade. You place a buy stop 2 pips above. If price reverses without triggering the buy stop, good. Take profit, rinse and repeat. If the buy order is triggered and price then reverses down, TP sell and start averaging your buy. If price blasts up, average yours sell orders and close your buy at a logical point - either where you think price is exhausted and will reverse, which will net you more profit but you risk price shooting back up again, or when price reverts back to the MA - you should technically have your sell-basket BE or in profit and your buy in profit as well.

What this does is, it adds a bit more profit to your balance, allowing you to breakeven faster on your sell basket. It also helps prevent a big loss if price spikes violently - the buy side profit will mitigate a lot of that loss and you won't need to average so hard.

Is it make chaotic? Yes. Can it fail catastrophically? Yes. Is more fun. Yes. Lolx.
I didn't mean to bring hedging into this thread and make it more complicated then it already is, but it's something to think about when you've exhausted the averaging methodology. At some point, you're going to average to death anyways. Your options include margin call, hard stop or hedging of some sort.

Not to hijack this thread, but that's what these guys are doing over at this thread.
https://www.forexfactory.com/thread/...out-prediction

But honestly, I don't have a definite answer. We all need to find a way to deal with an eventual drawdown from hell. I've tested several recovery bots that use hedging and averaging and even with the most conservative risk settings, there will be a point where the market just eats it alive.

It's a bit ironic because the common trading saying is "the trend is your friend until it bends". In our case, the range is our friend till it bends.

I'd imagine Melvin Capital (the hedgefund that shorted GameStop) has nightmares about this.

Will test it later. Thanks @cpfleger!

cliffjaded,
Reference your post 387.
I may read this incorrectly so bare with me but it reads like you have too many options going during your trades...May I suggest to slow down and choose one method and master this technique without adding more options, Keep It Simple and Sweet (changed the old american KISS wording to be more even and not discriminated). All of your techniques stated do work but most retail Traders tend to do too much, which is my interpretation of your post.
cpfleger

If got so far. I would stop entering new positions and ride it out. That’s just 1 day, I bet by end of week or following week. Price retraced to that price level?

That's an interesting approach my friend, feel free to post examples of your hedging approach. I don't consider it hijacking since it's still a way to protect against strong/long trends when using the cost averaging method in a countertrend strategy

I am too afraid to use hedging with too many positions, but I have experimented using single position hedging like the one shown in this video (using oscillators):



I post it here because it may give the readers a few more ideas for money management experiments to test.

In this case that would be a terrible idea (price never returned to the hypothetical starting point):


That's why I think that long holding periods for short term trades are a terrible idea. I would have used the 200 EMA as a limit in this case, since that's where the pullback happened (exit at a loss). However... (preparing a few more observations).

Hey is this the RSI indicator on mt4 you can access by going to custom indicator tab and adding RSI? Sorry ii want to make sure i set it up like yours! Ive been following King since last year as well.

ausar,
see page 4, post 68 for the Indicator.
cpfleger

Ok guys so:

a) cliffjaded would have used hedging to manage the losing positions.
b) cpfleger would have used better timing for entries using supply and demand zones.
c) RieseP would have accepted a daily loss and stop adding new positions.

I want to share an observation I have made for EURUSD, GBPUSD, Ger-30 pairs in different timeframes:



These images may trigger a big "duh", but could this be one of the key factors for surviving mid and long term trends using cost averaging, or am I going insane? (I know the spread is high in Ger-30 but could be more useful in EURUSD/GBPUSD) I read your opinions

My friend, I am trying to create a template using your indicators to share with everybody, however one of them is causing a lot of issues on the platform (it's completely frozen), how do you manage that?

Abade,
So your data may support one of my earlier posts of my MA Guide - 100% 9 EMA / 75% 20 EMA / 50 50 EMA and 25% 200 EMA.
Once a Trader meets his / her 90% plus winning performance hitting the 20 EMA he / she will become more confident and step away from zero spreads pairs and start trading slightly higher spread Instruments.

KoF uses the 1M TF due to the Platform MT4 default Tick Data is the closes to the 1M TF and this is lowest the Chart can be viewed even though he says anyone can use the 1 and 5M TF to scalp. Remember all TF's are just decompressed 1M TF Charts for viewing pleasure. The Market has NO TF.

Yes the 1M TF is great to scalp the 20 EMA and with your data you should just focus on this simple technique and become a Master Scalper with no other options to distort your mission - performance makes profits.

I would like to start a Challenge with the team members in the new year to make all members of this stream an Expert and become wealthy within 1 year.
cpfleger

Abade,
please define the Indicator which is the issue.
cpfleger

template

HA Candle Indicator which can be turned off and only regular Candlesticks. Upload all Indicators first and then the above Template....
cpfleger